KRM Om10 ch05

Quality and Performance
Chapter 5 05 - 01
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall.
What is Quality?
Quality
A term used by
customers to
describe their
general satisfaction
with a service or
product.
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 - 02

Costs of Quality
Prevention Costs
Appraisal Costs
Internal Failure Costs
External Failure Costs

Ethics and Quality
Balancing the traditional measures of quality

performance and the overall benefits to
society.
Identifying deceptive business practices.
Developing a culture around ethics.
Training employees to understand how ethics
interfaces with their jobs.
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 -04

Total Quality Management
TQM
A philosophy
that stresses
principles for
achieving high
levels of process
performance
and quality.
Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05- 05
Customer Satisfaction
Conformance to Specifications
Value
Fitness for Use
Support
Psychological Impressions

Employee Involvement
Cultural Change
Teams
Employee Empowerment
Problem-solving teams
Special-purpose teams
Self-managed teams

Continuous Improvement
Kaizen
Problem-solving
tools
PDSA Cycle

What is Six Sigma?
Six Sigma
A comprehensive and flexible system for

achieving, sustaining, and maximizing
business success by minimizing defects and
variability in processes.

Six Sigma Approach
Process average OK; Process variability OK;
too much variation process off target
X X
X X X
XX XX
X X
X Process X
X
X X on target with
X X low variability
Reduce Center
spread process
XX
XX
X
XX X

05- 10
Six Sigma Improvement Model
Six Sigma Certification
Master Black Belts
Black Belts
Green Belts

Acceptance Sampling
Acceptance Sampling
The application of statistical techniques to
determine if a quantity of material from a
supplier should be accepted or rejected based
on the inspection or test of one or more
samples.
Acceptable Quality Level

A statement of the proportion of defective
items that the buyer will accept in a
shipment.
Acceptance Sampling Interface
Firm A uses TQM or Six
Buyer Sigma to achieve internal
Manufactures process performance
furnaces
Supplier uses TQM or Six
Firm A Sigma to achieve internal
Manufacturers process performance
Motor inspection
furnace fan motors
TARGET: Buyers specs
Supplier
Yes Accept No
motors? Blade inspection Manufactures
fan blades
TARGET: Firm As specs
Yes No
Accept
blades?
05- 13
Statistical Process Control (SPC)
SPC
The application of statistical techniques to
determine whether a process is delivering what
the customer wants.
Performance Measurements
Variables - Characteristics that can be
measured.
Attributes - Characteristics that can be

counted.
Sampling
Sampling Plan
Size of the sample
Time between successive samples
Decision rules that determine when action
should be taken
Complete Inspection
Inspect each product at each stage
Sampling Statistics
Sample Mean Sample Range
Sum of the observations Difference between the
divided by the total largest and smallest
observations n
observation in a sample
x i
where
x i 1
n
xi = observation of a quality characteristic (such as time)
n = total number of observations
x = mean

Sampling Statistics
Standard deviation The square root of the
variance of a distribution.
An estimate of the process standard deviation
based on a sample is given by:
x
2
x x
2
x n 2
i
i
i
or
n 1 n 1
where
= standard deviation of a sample
x = mean
Sampling Statistics
1. The sample mean is the sum of the observations divided
by the total number of observations.
n
x i
x i 1
n
where

x = mean
Sampling Statistics
2. The range is the difference between the largest
observation in a sample and the smallest. The standard
deviation is the square root of the variance of a
distribution. An estimate of the process standard
deviation based on a sample is given by
x 2
x x
2
x n 2
i
i
i
or
n 1 n 1
where
= standard deviation of a sample

05 - 19
Sampling Distribution

Types of Variation
Common cause
Variation that is random, unidentifiable
and unavoidable
Assignable cause
Variation that can be identified and
eliminated

Effects of Assignable Cause Variation
on the Process Distribution

Control Charts
Time-ordered diagram used to determine
whether observed variations are abnormal
Mean
Upper control limit
Lower control limit
Steps for a control chart

1. Random sample
2. Plot statistics
3. Eliminate the cause, incorporate improvements
4. Repeat the procedure
Control Limits and Sampling
Distribution
UCL
Nominal
LCL
Assignable
causes likely
1 2 3
Samples

Control Charts
UCL
Variations
Nominal
LCL
Sample number
(a) Normal No action

05- 25
Control Charts
UCL
Variations
Nominal
LCL
Sample number
(b) Run Take action

05- 26
Control Charts
UCL
Variations
Nominal
LCL
Sample number
(c) Sudden change Monitor

05- 27
Control Charts
UCL
Variations
Nominal
LCL
Sample number
(d) Exceeds control limits Take action

05- 28
Control Chart Errors
Type I error Type II error
Concluding that a Concluding that a
process is out of control process is in control
when it is in control when it is out of control

Control Chart Types

Variable Control Charts
R-Chart
UCLR = D4R and LCLR = D3R

Variable Control Charts
UCLx = x + A2R and LCLx = x A2R

Calculating Control Chart Factors

Steps for x- and R-Charts
1. Collect data.
2. Compute the range.
3. Use Table 5.1 to determine R-chart control
limits.
4. Plot the sample ranges. If all are in control,
proceed to step 5. Otherwise, find the
assignable causes, correct them, and return to
step 1.
5. Calculate x for each sample.

Steps for x- and R-Charts
6. Use Table 5.1 to determine x-chart control

limits
7. Plot the sample means. If all are in control, the

process is in statistical control. Continue to take
samples and monitor the process. If any are
out of control, find the assignable causes,
correct them, and return to step 1.

Example 5.1
The management of West Allis Industries is concerned about
the production of a special metal screw used by several of the
companys largest customers. The diameter of the screw is
critical to the customers. Data from five samples appear in the
accompanying table. The sample size is 4. Is the process in
statistical control?

Example 5.1
Compute the range for each sample and

the control limits
UCLR = D4R = 2.282(0.0021) = 0.00479 in.
LCLR = D3R = 0(0.0021) = 0 in.

Example 5.1
Process variability is in statistical control.

05- 38
Example 5.1
Compute the mean for each sample and the

control limits.
0.5027 + 0.729(0.0021) = 0.5042 in.
0.5027 0.729(0.0021) = 0.5012 in.

Example 5.1
Process average is NOT in statistical control.

An Alternate Form
If the standard deviation of the process
distribution is known, another form of the x-
chart may be used:

05 - 41
Example 5.2
For Sunny Dale Bank the time required to serve customers at
the drive-by window is an important quality factor in
competing with other banks in the city.
After several weeks of sampling, two successive

samples came in at 3.70 and 3.68 minutes, respectively.
Is the customer service process in statistical control?

Example 5.2
For Sunny Dale Bank the time required to serve
customers at the drive-by window is an important
quality factor in competing with other banks in the
city.
After several weeks of sampling, two successive samples

came in at 3.70 and 3.68 minutes, respectively. Is the
customer service process in statistical control?
Example 5.2
x = 5 minutes
= 1.5 minutes
n = 6 customers
z = 1.96
The process variability is in statistical control, so we proceed

directly to the x-chart. The control limits are
UCLx = x + z/n = 5.0 + 1.96(1.5)/6 = 6.20 minutes
LCLx = x z/n = 5.0 1.96(1.5)/6 = 3.80 minutes

The new process is an improvement.
05 - 44
Application 5.1
Webster Chemical Company produces mastics and caulking for the
construction industry. The product is blended in large mixers and
then pumped into tubes and capped.
Webster is concerned whether the filling process for tubes of
caulking is in statistical control. The process should be centered on
8 ounces per tube. Several samples of eight tubes are taken and
each tube is weighed in ounces.
Tube Number
Sample 1 2 3 4 5 6 7 8 Avg Range
1 7.98 8.34 8.02 7.94 8.44 7.68 7.81 8.11 8.040 0.76
2 8.23 8.12 7.98 8.41 8.31 8.18 7.99 8.06 8.160 0.43
3 7.89 7.77 7.91 8.04 8.00 7.89 7.93 8.09 7.940 0.32
4 8.24 8.18 7.83 8.05 7.90 8.16 7.97 8.07 8.050 0.41
5 7.87 8.13 7.92 7.99 8.10 7.81 8.14 7.88 7.980 0.33
6 8.13 8.14 8.11 8.13 8.14 8.12 8.13 8.14 8.130 0.03
Avgs 8.050 0.38

Application 5.1
Assuming that taking only 6 samples is sufficient, is
the process in statistical control?
1.864(0.38) = 0.708
0.136(0.38) = 0.052
The range chart is out of control since sample 1 falls

outside the UCL and sample 6 falls outside the LCL.

05- 46
Application 5.1
Consider dropping sample 6 because of an
inoperative scale, causing inaccurate measures.
Tube Number
Sample 1 2 3 4 5 6 7 8 Avg Range
1 7.98 8.34 8.02 7.94 8.44 7.68 7.81 8.11 8.040 0.76
2 8.23 8.12 7.98 8.41 8.31 8.18 7.99 8.06 8.160 0.43
3 7.89 7.77 7.91 8.04 8.00 7.89 7.93 8.09 7.940 0.32
4 8.24 8.18 7.83 8.05 7.90 8.16 7.97 8.07 8.050 0.41
5 7.87 8.13 7.92 7.99 8.10 7.81 8.14 7.88 7.980 0.33
Avgs 8.034 0.45
What is the conclusion on process variability and

process average?
Application 5.1
1.864(0.45) = 0.839
0.136(0.45) = 0.061
8.034 + 0.373(0.45) = 8.202
8.034 0.373(0.45) = 7.866
The resulting control charts indicate that the

process is actually in control.
05- 48
Control Charts for Attributes
p-charts are used to control the proportion defective
Sampling involves yes/no decisions so the underlying
distribution is the binomial distribution
The standard deviation is
p p 1 p / n
p = the center line on the chart
and

Example 5.3
Hometown Bank is concerned about the
number of wrong customer account
numbers recorded. Each week a random
sample of 2,500 deposits is taken and the
number of incorrect account numbers is
recorded
Using three-sigma control limits, which
will provide a Type I error of 0.26 percent,
is the booking process out of statistical
control?
Example 5.3
Sample Wrong Account Sample Wrong Account

Number Numbers Number Numbers
1 15 7 24
2 12 8 7
3 19 9 10
4 2 10 17
5 19 11 15
6 4 12 3
Total 147

05 - 51
Example 5.3
Total defectives 147
p= = = 0.0049
Total number of observations 12(2,500)
p = p(1 p)/n = 0.0049(1 0.0049)/2,500 = 0.0014
UCLp = p + zp = 0.0049 + 3(0.0014) = 0.0091
LCLp = p zp = 0.0049 3(0.0014) = 0.0007
Calculate the sample proportion defective and plot each

sample proportion defective on the chart.

Example 5.3
Fraction Defective
.0091 X
UCL
X X
X
X X
.0049 X Mean
X
X
X X
.0007 X LCL
| | | | | | | | | | | |
1 2 3 4 5 6 7 8 9 10 11 12
Sample
The process is NOT in statistical control.

05 - 53
Application 5.2
A sticky scale brings Websters attention to whether caulking
tubes are being properly capped. If a significant proportion of
the tubes arent being sealed, Webster is placing their
customers in a messy situation. Tubes are packaged in large
boxes of 144. Several boxes are inspected and the following
numbers of leaking tubes are found:
Sample Tubes Sample Tubes Sample Tubes
1 3 8 6 15 5
2 5 9 4 16 0
3 3 10 9 17 2
4 4 11 2 18 6
5 2 12 6 19 2
6 4 13 5 20 1
7 2 14 1 Total = 72

Application 5.2
Calculate the p-chart three-sigma control limits to assess
whether the capping process is in statistical control.
Total number of leaky tubes 72
p 0.025
Total number of tubes 20144
p1 p 0.0251 0.025
p 0.01301
n 144
UCL p p z p 0.025 30.01301 0.06403
LCL p p z p 0.025 30.01301 0.01403 0
The process is in control as the p values for the samples

all fall within the control limits.

Control Charts for Attributes
c-charts count the number of defects per unit of service

encounter
The underlying distribution is the Poisson distribution
UCLc = c + zc and LCLc = c zc

05 - 56
Example 5.4
The Woodland Paper Company produces paper for the
newspaper industry. As a final step in the process, the paper
passes through a machine that measures various product
quality characteristics. When the paper production process is
in control, it averages 20 defects per roll.
a. Set up a control chart for the number of defects per roll.

For this example, use two-sigma control limits.
b. Five rolls had the following number of defects: 16, 21,
17, 22, and 24, respectively. The sixth roll, using pulp
from a different supplier, had 5 defects. Is the paper
production process in control?

Example 5.4
a. The average number of defects per roll is 20. Therefore
= 20 + 2(20) = 28.94
LCLc = c zc = 20 2(20) = 11.06

Example 5.4
b.
The process is technically out of control due to Sample 6.

However, Sample 6 shows that the new supplier is a good one.
Application 5.3
At Webster Chemical, lumps in the caulking compound could
cause difficulties in dispensing a smooth bead from the tube.
Even when the process is in control, there will still be an
average of 4 lumps per tube of caulk. Testing for the presence
of lumps destroys the product, so Webster takes random
samples. The following are results of the study:
Tube # Lumps Tube # Lumps Tube # Lumps
1 6 5 6 9 5
2 5 6 4 10 0
3 0 7 1 11 9
4 4 8 6 12 2
Determine the c-chart two-sigma upper and lower control

limits for this process.
Application Problem 5.3
6 5 0 4 6 4 1 6 5 0 9 2
c 12
4
c 4 2
UCL c c zc 4 22 8
LCLc c zc 4 22 0

Process Capability
Process Capability The ability of the process

to meet the design specification for a service
or product
Nominal Value
Tolerance

Process Capability
Nominal
value
Process distribution
Lower Upper
specification specification
20 25 30 Minutes
(a) Process is capable

05- 63
Process Capability
Nominal
value Process distribution
Lower Upper
20 25 30 Minutes
(b) Process is not capable

05- 64
Process Capability
Nominal value
Six sigma
Four sigma
Two sigma
Lower Upper
Mean
05- 65
Process Capability Index
Measures how well a process is centered and
whether the variability is acceptable
x Lower specification Upper specification x

Cpk = Minimum of ,
3 3
where
= standard deviation of the process distribution

Process Capability Ratio
A test to see if the process variability is
capable of producing output within a
products specifications.
Upper specification Lower specification

Cp =
6

Example 5.5
The intensive care unit lab Upper specification =
process has an average
30 minutes
turnaround time of 26.2
minutes and a standard Lower specification
deviation of 1.35 minutes. 20 minutes
The nominal value for this Average service
service is 25 minutes + 5
26.2 minutes
minutes.
Is the lab process capable =
of four sigma-level 1.35 minutes
performance?

Example 5.5
Cpk = Minimum of ,
Cpk = Minimum of 26.2 20 , 30 26.2

3 ( 1.53) 3( 1.53)
Cpk = Minimum of 1.53, 0.94
Cpk = 0.94
Process does not meets 4-sigma level of 1.33

Example 5.5
Cp = Upper Specification Lower Specification
6
Cp = 30 20 = 1.23
6 (1.35)
Process did not meet 4-sigma level of 1.33

Example 5.5
New Data is collected: Cp = Upper - Lower
6
Upper specification =
30 minutes Cp = 30 20 = 1.39
Lower specification 6 (1.20)
20 minutes
Average service
Process meets 4-sigma
26.1 minutes
level of 1.33 for
= 1.20 minutes variability

Example 5.5
Cpk = Minimum of x Lower specification ,Upper specification x

3 3
Cpk = Minimum of 26.1 20 , 30 26.1
3 ( 1.20) 3 ( 1.20)
Cp = 1.08
Process does not meets 4-sigma level of 1.33

Application 5.4
Webster Chemicals nominal weight for filling

tubes of caulk is 8.00 ounces 0.60 ounces. The
target process capability ratio is 1.33, signifying
that management wants 4-sigma performance.
The current distribution of the filling process is
centered on 8.054 ounces with a standard
deviation of 0.192 ounces. Compute the process
capability index and process capability ratio to
assess whether the filling process is capable and
set properly.

Application 5.4
a. Process capability index:
x Lower specification Upper specification x

Cpk = Minimum of ,
3 3
8.054 7.400 8.600 8.054

= Minimum of = 1.135, = 0.948
3(0.192) 3(0.192)
The value of 0.948 is far below the target of 1.33.

Therefore, we can conclude that the process is not
capable.

Application 5.4
b. Process capability ratio:
Upper specification Lower specification 8.60 7.40

Cp = = = 1.0417
6 6(0.192)
The value of Cp is less than the target for four-sigma quality.
Therefore we conclude that the process variability must be

addressed first, and then the process should be retested.

Quality Loss Function
Loss (dollars)
Lower Nominal Upper

specification value specification

05- 76
International Quality
Documentation Standards
ISO 9001:2008 Quality Standards
ISO 14000:2004 Environmental

Management Standards
ISO 26000:2010 Social Responsibility

Guidelines

Baldridge Performance
Excellence Program
Leadership
Strategic Planning
Customer Focus
Measurement, Analysis, and Knowledge
Management
Workforce Focus
Operations Focus
Results
Solved Problem 1
The Watson Electric Company produces incandescent light bulbs.
The following data on the number of lumens for 40-watt light
bulbs were collected when the process was in control.
Observation
Sample 1 2 3 4
1 604 612 588 600
2 597 601 607 603
3 581 570 585 592
4 620 605 595 588
5 590 614 608 604

05 - 79
Solved Problem 1
604 + 612 + 588 + 600

x= = 601
4
R = 612 588 = 24
Sample R
1 601 24
2 602 10
3 582 22
4 602 32
5 604 24
Total 2,991 112
Average x = 598.2 R = 22.4
05 - 80
Solved Problem 1
The R-chart control limits are
2.282(22.4) = 51.12
0(22.4) = 0
The x-chart control limits are
598.2 + 0.729(22.4) = 614.53
598.2 0.729(22.4) = 581.87
b. First check to see whether the variability is still in control based

on the new data. The range is 53 (or 623 570), which is
outside the UCL for the R-chart. Since the process variability is
out of control, it is meaningless to test for the process average
using the current estimate for R. A search for assignable causes
inducing excessive variability must be conducted.
Solved Problem 2
The data processing department of the
Arizona Bank has five data entry clerks. Each
working day their supervisor verifies the
accuracy of a random sample of 250 records.
A record containing one or more errors is
considered defective and must be redone.
The results of the last 30 samples are shown
in the table. All were checked to make sure
that none was out of control.

Solved Problem 2
Number of Defective Number of Defective
Sample Sample
Records Records
1 7 16 8
2 5 17 12
3 19 18 4
4 10 19 6
5 11 20 11
6 8 21 17
7 12 22 12
8 9 23 6
9 6 24 7
10 13 25 13
11 18 26 10
12 5 27 14
13 16 28 6
14 4 29 11
15 11 30 9
Total 300
Solved Problem 2
a. Based on these historical data, set up a p-chart
using z = 3.
b. Samples for the next four days showed the
following:
Sample Number of Defective Records
Tues 17
Wed 15
Thurs 22
Fri 21
What is the supervisors assessment of the data-

entry process likely to be?
05 - 84
Solved Problem 2
SOLUTION
a. From the table, the supervisor knows that the total number
of defective records is 300 out of a total sample of 7,500 [or
30(250)]. Therefore, the central line of the chart is
300
p= = 0.04
7,500
The control limits are
p 1 p 0.04(0.96)
UCL p p z 0.04 3 0.077
n 250
p 1 p 0.04 3 0.04(0.96) 0.003
LCL p p z 250
n
05 - 85
Solved Problem 2
b. Samples for the next four days showed the following:
Number of Defective
Sample Proportion
Records
Tues 17 0.068
Wed 15 0.060
Thurs 22 0.088
Fri 21 0.084
Samples for Thursday and Friday are out of control. The

supervisor should look for the problem and, upon identifying it,
take corrective action.

05 - 86
Solved Problem 3
The Minnow County Highway Safety Department
monitors accidents at the intersection of Routes 123
and 14. Accidents at the intersection have averaged
three per month.
a. Which type of control chart should be used?
Construct a control chart with three sigma control
limits.
b. Last month, seven accidents occurred at the
intersection. Is this sufficient evidence to justify a
claim that something has changed at the
intersection?
Solved Problem 3
SOLUTION
a. The safety department cannot determine the number of
accidents that did not occur, so it has no way to compute a
proportion defective at the intersection. Therefore, the
administrators must use a c-chart for which
UCLc = c + z c = 3 + 3 3 = 8.20
LCLc = c z c = 3 3 3 = 2.196
There cannot be a negative number of accidents, so the LCL in

this case is adjusted to zero.
b. The number of accidents last month falls within the UCL and
LCL of the chart. We conclude that no assignable causes are
present and that the increase in accidents was due to chance.
05 - 88
Solved Problem 4
Pioneer Chicken advertises lite chicken with 30
percent fewer calories. (The pieces are 33 percent
smaller.) The process average distribution for lite
chicken breasts is 420 calories, with a standard
deviation of the population of 25 calories. Pioneer
randomly takes samples of six chicken breasts to
measure calorie content.
a. Design an x-chart using the process standard deviation.
b. The product design calls for the average chicken breast
to contain 400 100 calories. Calculate the process
capability index (target = 1.33) and the process
capability ratio. Interpret the results.
05 - 89
Solved Problem 4
SOLUTION
a. For the process standard deviation of 25 calories, the standard
deviation of the sample mean is
25
x 6
10.2 calories
n
420 + 3(10.2) = 450.6 calories
420 3(10.2) = 389.4 calories

Solved Problem 4
b. The process capability index is
Cpk = Minimum of ,
420 300 500 420

= Minimum of = 1.60, = 1.07
3(25) 3(25)
The process capability ratio is

Upper specification Lower specification 500 300
Cp = = = 1.33
6 6(25)
Because the process capability ratio is 1.33, the process should be able to
produce the product reliably within specifications. However, the process
capability index is 1.07, so the current process is not centered properly
for four-sigma performance. The mean of the process distribution is too
close to the upper specification.
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Printed in the United States of America.

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Quality and Performance

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 - 02

Internal Failure Costs

External Failure Costs

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Balancing the traditional measures of quality

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Fitness for Use

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A comprehensive and flexible system for

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Master Black Belts

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Acceptable Quality Level

Attributes - Characteristics that can be

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 - 16

xi = observation of a quality characteristic (such as time)

= standard deviation of a sample

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Steps for a control chart

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(a) Normal No action

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(b) Run Take action

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(c) Sudden change Monitor

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(d) Exceeds control limits Take action

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall.

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 - 29

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UCLR = D4R and LCLR = D3R

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UCLx = x + A2R and LCLx = x A2R

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6. Use Table 5.1 to determine x-chart control

7. Plot the sample means. If all are in control, the

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05- 35

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05 - 36

Compute the range for each sample and

UCLR = D4R = 2.282(0.0021) = 0.00479 in.

LCLR = D3R = 0(0.0021) = 0 in.

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05- 37

Process variability is in statistical control.

Compute the mean for each sample and the

0.5027 + 0.729(0.0021) = 0.5042 in.

0.5027 0.729(0.0021) = 0.5012 in.

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall. 05- 39

Process average is NOT in statistical control.

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall.

After several weeks of sampling, two successive

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After several weeks of sampling, two successive samples

The process variability is in statistical control, so we proceed

UCLx = x + z/n = 5.0 + 1.96(1.5)/6 = 6.20 minutes

LCLx = x z/n = 5.0 1.96(1.5)/6 = 3.80 minutes